The Entrepreneurial Universe - Classification of Entrepreneurs by Types - Assignment Example

The Entrepreneurial Universe

Entrepreneurship can be defined as the process of making a design, its launch, and running a new business with an aim of making a profit. There are several types of entrepreneurs in the world beginning with the simplest to the most complicated as discussed.

Classification by Types

Micro2 Business

Micro2 business involves self-employed individuals who work together as a team, but none of them work for others. The business is characterized by a wide array of challenges such as inadequate skills, management, planning challenges, and financing. It may require both skilled and unskilled labor in addition to professional skills. Micro2 Business may require additional training for individuals that need to start this kind of business. Most of micro2 businesses tend to focus on service provision but a significant number also get involved in small scale product manufacturing and sales. The business model is not complicated and does not need highly specialized expertise and creativity. Entrepreneurs in this sector only need to find a place where demand is higher than supply or provide better service at a lower price than existing competitors. The goals of micro2 business start-ups include getting enough customers for personal financial goals or startup capital for bigger investments. Ideally, micro2 businesses often start with $20,000 as capital (Byrne, Fayolle and Toutain 263). The sources of capital can be from personal savings and company cash flow for investment. Micro2 entrepreneurs include sole proprietors who enjoy autonomy, control, and freedom over financial and status achievement. Its disadvantages are a burden of responsibility, little margin for error, bad choices, no off days, isolation, and a problem of separation of work. Exit strategy can be achieved easily by selling assets and customer lists. I feel that I can fit in this business type since it is easy to start, manage, and market through advertising by word of mouth and referrals by customers. My intrinsic ability to focus on detail and provide high-quality work gives me competitive advantage in micro2 based business model. Additionally, I am a hands-on person and prefer doing things my own way.

Micro Businesses

A micro business is a venture in which the businessperson hires people, assign tasks to them, and control the business from a managerial perspective. A micro business entrepreneur may hire because it is more convenient, increase productivity of the venture, acquire variety of the needed skills, and if the business model requires it. Business may also be full or part-time, and the business models may include, idea of advantage, product, or service business. An example of this business is a consulting firm in which additional skilled consultants may be hired to expand service portfolio and customer reach. The task of a micro entrepreneur includes generating revenue, paying others to do the work, and providing overall management in addition to solving employee issues. The primary role of the owner involves incurring a marginal cost of employees, paying salaries, benefits, taxes, insurance premiums, supplies, utilities, and incurring hiring costs. Micro business owners incur fixed costs irrespective of whether revenue has been generated or not (264). I fit in this type of business since having employees to assist will enable me run the business efficiently. The business will allow me follow demand, learn and become more sophisticated by taking on new activities, engaging in marketing and sales activities, and adding market and customers. It is easier to analyze market through monitoring growth, profitability, trends, distribution of products. The key success factors are many clients, various segments, increased client needs, motivated employees, and increased research.

Small Businesses

Small businesses are those in which some individuals that work in the enterprise or the number of locations increases such that the entrepreneur is unable to manage them and employees some assistants. As the size of the enterprise becomes bigger, significant revenue generating opportunities become bigger eliciting the need for even more sophisticated type of management. The pro-growth factors include intentions of the entrepreneur, ability of the contractor, opportunity (264). The business can grow due to personal characteristics, values and beliefs, and customer numbers and classifications. On the other hand, some issues such as lack of ambition and vision, quality of products, protectionism by owners, and mature position in life cycle can interfere with business growth. However, there are disadvantages such as constrained managerial competencies, narrow skills base, production limitations, and other issues that may come up. The organizational structure may lead to lack of time, resources, and opportunities in the business environments for personal growth as much energy may be articulated towards managing the enterprise. Other challenges include prevailing market conditions, access to finance, public sector regulation, and labor market. Such challenges may lead to lack of competitive advantage with other businesses, especially in a bad economy. I feel that I can fit in this type of activity since I possess adequate education, business knowledge, self-perception of abilities, and other management qualities. I prefer this kind because of its growth potential for products, assets, and premises, a legal format of business, and learning through networks. However, I would need to hone my managerial skills through advanced learning and perhaps being employed as a manager in a similar set up before trying it on my own.

Growth Venture

A growth Venture is a business started by a team of people to create and grow a huge company that may compose of over 500 members who need to raise money from outside investors with the idea of eventually going public or selling the company after some time. People may form this business with the aim of innovating a business idea, introduce a new product or service, or if they discover their potential as they run their individual businesses. Some examples of these firms include Dell, Compaq, Wal-Mart, and many others. I may not fit because of the huge amount of capital involved, regulations, lack of highly skilled portfolio networks, and lack of an influential personal career profile. In addition, growth venture has complex requirements such as strategic planning, idea generation and analysis, national and international perspective, and incorporation of many members besides entrepreneurial education (265). I prefer working with smaller teams, but venture requires large teams, highly educated managers, technically skilled work force, management experience, management training, and written procedures among others. Entrepreneurship process involves idea generation, opportunity assessment, forming a team, organizing, writing a plan, raising money, and starting operations. The business is tedious, and most significantly, requires time investment, thus not my preference as I prefer relatively quick return on investment.

Contexts

Social Enterprises

Social enterprises are entrepreneurship for non-profits and for-profits with a social mission are complex businesses created to serve some unique goal and require resources for sustainability (Kuratko, Morris and Schindehutte 2). The Non-Profits do not pay income taxes, have no profit since they call it a surplus, and need to be cash flow positive or will go bankrupt, and generate cash from operations and donors instead of investors. Examples of such formations include organizations protecting nature, culture, environment, human services, unions, and museums among others. The ones for-Profit include companies with social missions with a Purpose of creating general public benefit to shareholders and the society. Money is raised from investors who receive dividends at the end of the trading period. Non-profits are measured by inputs rather than outputs or to solve a problem through donor funding. I fit in this category since the business requires strong commitment to serving the public. To enter this business, I will need to make my contributions or buy shares if the organization is for profit making. There are many issues for social entrepreneurs such as measuring and managing performance, clients, donors; workers all want different things, donors usually place their strings attached, restricted by non-profit status and others.

Corporate Entrepreneurship

Corporate entrepreneurship refers to the development of new enterprises in sectors within large and medium sized organizations and may be called intrapreneurship. Corporate venturing is the creation of a venture fund by corporations to invest in startup companies and the desired growth cannot be achieved in existing businesses (2). Another reason is if newer technologies are a threat to the ones that exist, or some opportunities present themselves. There are issues for intrapreneurs such as exit strategies that may be to fold back into the regular organization and be killed as it happened with the (IBM), and poor career move. It is impossible for me to fit in this kind of business as it is very complicated and one may need to act just like a startup dealing with investors besides the need to negotiate ones’ deal upfront. Excellent corporations must be involved in forming the business. This allows for culture growth, development of skills, growth of infrastructure and other positive returns. However, its complexity requires high-skilled management, huge capital, strict regulations, and other important measures to ensure its sustainability. Some of the examples are the Bristol-Myers Squib, Boston Scientific, and many others.

Technological Entrepreneurship

Entrepreneurship in high-technology industries is achieved through the creation of a company by bringing a new technology to market through innovation, development of new, and extensive research (Schindehutte, Morris and Kuratko 9). I can fit in this kind of business since I love being innovative and the company will give me the opportunity to further the skills. The organization is formed by coming up with an idea, commercialization of new or improved products and processes, and allowing more to contribute towards expanding the scientific knowledge. High technology industries are classified depending on their goods or processes that use important recent advances in science or technology and firms spend heavily on the acquiring knowledge and technical skills (9). The methods of forming a technological enterprise include preliminary technical feasibility, product design, prototype construction, prototype testing, and prototype trials with customers, full production, market launch, and results. Joining this group of entrepreneurs will require me to participate in coming up with ideas and cooperating with the rest of the team to develop the required product.

International Entrepreneurship

International entrepreneurship is a case where an industry is selected, and factories are constructed for global markets such a steel, ships, cars, and textiles among others. The companies get incentives to relocate to foreign countries such as reduced taxes, insurances, and sponsored training to enable them to enlarge their businesses. For these firms, the owners need to use the communist system of plan and control rather than the free market system. This system of trade involves innovation, creating jobs, commercialization of new technologies, growth of economy, and other developments (17). The enterprises also development of regional capabilities and turn locals into entrepreneurs and solve problems in areas with chronic unemployment and underinvestment by the private sector. Other benefits include tax breaks, guaranteed loans, worker training enabling the managers to operate will less challenge. Community-based organizations work with people to give them the help needed to start companies. However, they focus on micro businesses rather than growth ventures thus the benefits may be limited to specific groups. I feel that I fit in this category due to its many achievements especially the reduction of taxes and government funding and will have enough to invest in it.

Roles

Small Business Banker

The small business banker is a venture aimed at understanding the banking needs of other business operators (Audretsch 9). The trader is ready to meet the clients anywhere and anytime for investment options. The banker lends to businesses keeps their money and finances their business activities whenever they need. A banker will dedicate time to educating clients on best ways of using the bank and offer other services such as payroll, cash flow management, and remote deposits. However, a bank gets very little from a loan owing to the costs incurred such as underwriting and management. In case of bad loans, a banker suffers a significant loss, yet they are supposed to go on with their business activities. The process of giving out a loan is also long and complicated and may require competent loan officers. The banker may require an individual to produce 2-3 years of historical financial information, several documents to support, customers’ and products, and an operational plan. The bank has o know how the client will repay the loan by looking at the cash flow. Considering the challenges the business banker has to go through I may not fit in this company since is involves many risks. Again, it may require employing loan officers to follow-up on the clients and recover the borrowed funds.

Community-Based Advisor (Urban/ International Entrepreneurship)

An urban enterprise may include projects such as economic development, regional growth, the anti-Poverty programs, or urban renewals. International entrepreneurs serve the global market in providing services, rebuilding nations, and offering services. It is aimed at helping those in depressed areas, the minorities, women, and vulnerable children (Byrne, Fayolle and Toutain 263). For instance, when countries came out of WWII there was the rebuilding of Europe and Japan with some very successful programs initiated for that purpose. There is the need for centralized planning, a participation of big institutions, government control that takes on new problems to help in starting economic development in underdeveloped countries. Examples of such organizations are the World Bank, the IMF, and other bodies that give loans for development to the countries that need it. I do not fit in this kind of business since it is managed by government officials and does not cater for individual needs. A community-based advisor for urban and international entrepreneurship does the roles of ensuring that entrepreneurs are well-informed on various issues concerning business operations through entrepreneurial education and training (265). Again, the activities are complex and highly regulated, and I would prefer smaller enterprise that I can implement ideas quickly. The businesses have experienced mixed success due various internal and external factors. Several economic development groups are trying to encourage the growth of worker-owned cooperatives in the United States as a way of creating wealth to low-income communities.

Venture Capitalists

Venture capitalists are traders that invest other peoples' funds to start a business and become actively involved in strategizing and directing the company (Kuratko, Morris and Schindehutte 2). They specialize in industry, technology, strategy, and the stage of business. The main aim is to maximizing value, ensure management credibility, utilize their market potential, and ensure operating plan and earnings visibility. The business process will involve making of the executive summary, business concept, market analysis, and opportunity, technology and Production Plan, sales plan, organization Plan, Financial Projections and Objectives. Environment, competitors, customers, bottom-up market sizing, technology, and the sales Plan affect the market (2). Financials must show that investors are smart enough to do them, and they may need to do everything before anyone believes in their ability. Considering the formation of this kind of venture, I may not fit in since the procedure is quite complicated. It may be difficult to convince investors to give out their money to be invested in start-up business when they can commit it in existing businesses.

Agent/Consultant and Professional Services

Agents are intermediaries between the entrepreneurs and resources acting as a consult, coach, mentor and sometimes may act as a team member. They may take one of the roles without an intention or understanding of doing it full time. The professional service providers may include accountants, insurance agents, lawyers, insurance agents, advertisers, and realtors. These can also form the advisory board and for one to perform the roles should Know their value is in experience and network. They should also, provide the basis, assist in building the company, and manage the relationship, not the transactions. In addition, they must build long-term relationships with the risk takers and work diligently. However, they should never work for short-term profits, act as accountants, lawyers, or bankers, never alter commitments, and never forget the source of income. This is where I fit most since I love participating in professional and consultation services. To join this group, I will need to acquire the relevant discussion skills and ensure that I receive more experience, especially in the corporate world.